Value Added Tax

Favourable policy regimes and an optimistic industrial outlook have resulted in a proliferation of players across industries. Increasing competition has led organizations to expand their ecosystem of suppliers and distribution networks. Volumes across industries such as retail, telecommunications, fast moving consumer goods, white goods etc. are now being driven by an organization’s pan-India presence.

Supply network design activity is targeted at reaching out to where the markets lie. As scales of operations increase, supply chains spread across states. While transaction costs are addressed principally from a logistics point of view, compliance with state taxation laws also add to operating costs.

While the value added tax (VAT) legislations have a common structure across states, certain peculiarities are observed for individual states. Some of these peculiarities are in the areas of handling of credit of capital goods, sale of scrap and second hand goods, formats of mandatory submissions and audit exercises. A typical challenge to the organization’s management has been lack of control over state units and local consultants. This happens due to multiplicity of laws across different states and U.T.’s and frequent changes in them.

We at BMS seek to address these peculiarities and reduce tax related transaction costs. We understand that the domain of VAT compliance spans across maintenance of records of stock transfers across and within states, all sales and purchases made by registered last mile supply chain entities (be they manufacturers, dealers or traders), input credit reversals, determination of taxable value, maintaining tax credit registers, handling issues pertaining to works contract, entry taxes and Central Sales Tax (CST) and mandatory submissions.

We bring to table a centralized compliance approach with visibility of the state units and local consultants. Our services are woven around our proprietary software and bring to clients the value proposition of applying their tax positions in every transaction.

Our compliance services include:

•    Automated computation of value added tax liability applying tax positions taken      by clients in an IT enabled framework
•    Automated generation of payment instruments (challans) and returns (monthly,      quarterly and annual)
•    System driven maintenance of input and output tax credit registers
•    Reconciliation of:
        o  Stock registers with actual sales and purchases taking return of goods,            free supply etc. into account
        o  Tax credit registers with stock to account for credit reversals in cases            of warranties etc.
•    Organization-wide management of the various consultants (tax service providers) that provide services such as filing returns, procuring blank forms from government offices etc. for various regional offices of the organization. This results in a single point of contact for all VAT related service provider relationships. It also holds the promise of a uniform and stricter implementation of service level agreements made by the organization.
•    Implementation of tax positions taken by organizations with respect to their      supply chain partners
•    Procurement and orchestration of dispatch of CST forms in a timely manner

Notifications under VAT acts of various states as well as those issued under the Central Sales Tax Act, product classifications across states, state-wise exempted lists of products and dealers and provisions under various VAT acts and rules of states form the business rules that support our service offering.

We ensure a smooth transition from the client’s own environment to a managed services one. In doing so we perform a detailed transition exercise and train client personnel on the new IT enabled environment where they would be managers of the processes that they had been executing in their organizations.

We also undertake compliance review exercises where we review existing frameworks of clients and ascertain the level of compliances of their processes and IT systems.

We assign a team that is completely conversant with nuances of value added tax and ensure that service level definitions are strictly adhered to.